Pay interest on interest! Yikes- get control.

Even though it has gotten more difficult to file personal bankruptcy with new federal laws put into place, it doesn’t seem to stop the indebtedness of Americans. Could it have anything to do with the five billion credit card applications geared to whatever hobby, sports affiliation or clothing label sent out last year to everyone who can put pen to paper and even those who can’t?

Only in the fine print do you see a 19.9 percent compounded interest rate. Most of us are aware that when we make a minimum payment rather than the whole enchilada, we are charged interest.

However, we should keep in mind that we will then pay interest on our interest. Miss a payment entirely and we get a late fee, plus our interest rate increases, not only on that card, but perhaps on our other cards. This is called universal default. If a company sees you default on one card, they jack up your interest rate on their card. To avoid credit card debt and the need to fill out personal bankruptcy forms, keep your cards to a minimum and pay them off completely each month. 

Shakespeare had it right when he opined “Neither a borrower nor a lender be.”